Companies End Plans for Bluegrass Pipeline Project

YOUNGSTOWN, Ohio -- A pipeline project intended to transport natural gas liquids from the Utica and Marcellus shale plays to processing centers in Louisiana has been suspended indefinitely, according to one of the partners in the venture.

The Bluegrass Pipeline, a partnership between Oklahoma-based Williams and Boardwalk Pipeline Partners LP, Houston, was to cross most of Columbiana County and a small portion of Mahoning County, sending natural gas liquids from this region to the Gulf Coast.

According to a statement issued on its website, Williams suspended capital investments on the project "primarily in response to an insufficient level of firm customer commitments."

Clint Powell, business agent for Local 809 of the Laborers International union, which jurisdiction includes Columbiana and Harrison counties, said he is disappointed that the project was canceled.

"It was a heck of an opportunity," Powell said. "That was a huge pipeline that could have put a lot of people to work."

Powell estimates from 150 to 200 of his members would've been involved in the project, and that doesn't include other trades such as plumbers, operating engineers and Teamsters on the project.

"It's devastating it's not going to happen," he said.

Still, Powell said, his union remains busy with other oil-and-gas-related projects in the southern tier of the Utica.

"We're still staying busy with MarkWest's plants in Cadiz and Hopedale," he reported. "Other energy companies as well are coming in, so it's still a good thing."

A statement jointly issued on the Bluegrass Pipeline website by Bluegrass representatives Bill Lawson and Michael McMahon thanked supporters and said they planned "to keep an open door for dialogue."

"While data show there will soon be a need for a large-scale solution like Bluegrass Pipeline to meet market needs, potential customers to date have so far chosen to focus on local solutions," the statement said. "As a result, we continue to pursue support for the project, but we are exercising capital discipline and not investing additional capital at this time."

By 2016, NGL production from the Marcellus and Utica shale region is expected to reach 650,000 barrels per day, marking an all-time high for U.S. NGL production, the statement said.

"In short, Bluegrass Pipeline appears to be a project that's ahead of its time," the statement said.

The project was to include the construction of 600 miles of new pipeline stretching from Mercer County, Pa., through Mahoning and Columbiana counties, and then south into Kentucky. There, the pipeline would tie into an existing pipeline that runs to Louisiana.

About 25 miles of pipeline were to run through Columbiana County, about 1.6 miles through Mahoning County.  The project could have led to the creation of 200 to 300 new local construction jobs and millions of dollars in leasehold deals for landowners by 2015.

As of October, the project had signed roughly 10% of its intended leases in Columbiana County, Jim Curry, Bluegrass’ land right-of-way project manager said during an informational session at Crestview High School.

Bluegrass Pipeline also called for the potential of constructing new processing plants along the route of the pipeline.

That project hit a snag when landowners in Kentucky refused to sign on. In addition, Williams said that the margins for natural-gas liquids are lower today than when the project was announced more than a year ago.

In February, Williams announced that it would delay completion of the Bluegrass Pipeline by about a year, from 2015 until sometime in the second half of 2016.

Copyright 2014 The Business Journal, Youngstown, Ohio.
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